NLS: That All May Read

Development of Life Cycle Cost Model for DTBs

Final report : April 2, 2007

Section 2 - Development of "Baseline" Source Datase

2.1 Process Used to Develop
Baseline Dataset for FY2005

The dataset used by the LCC model for the RC-based, or Baseline system,
updated with FY2005 source data, is attached as the Excel file "FY2005
Calculated Values April 2007.xls." It consists of an Excel workbook composed of 16 worksheets,
or tables, in which source data are contained and compiled as necessary to
provide inputs for the 101 data "Elements" used by the LCC model. An associated
notebook (3-ring binder), provided by NLS, has been updated with additional
hardcopy backup added as necessary and is being submitted to NLS along with
this final report.

The development of this dataset began with the use of the
file "FY2005 Calculated Values.xls," dated May 23, 2006, provided by NLS.
The first step in the process was to verify data for FY2004 that were contained
in the FY2005 file against FY2004 data in several other files, also provided
by NLS, the purpose being to establish a basis for which the derived FY2005
values could be compared. It was determined that all the FY2004 data were
consistent among the several files.

It was then determined that the FY2005
file as provided was only partially completed and documented. Furthermore,
there was no "checklist" which identified the extent to which the FY2005
update had progressed (the staff responsible for performing the update
had left NLS prior to completion of the update). ManTech, therefore, had
to effectively perform a full audit of the FY2005 dataset, collect and compile
additional source data as necessary, and calculate the values of the 101
data Elements as required for use by the LCC model.

Any logic errors found
in formulas which compile the source data in the various worksheets were
corrected. ManTech also identified and brought to the attention of NLS
in the draft report several issues regarding estimates and assumptions for
the source data used by the LCC model, and NLS feedback regarding these issues
has been incorporated into the final report and LCC model FY2005 update.

2.2 Baseline System Source Data Tables

Site The tables from the 16 worksheets in the FY2005 Baseline source dataset
are contained in Appendices A of the report, which document the sources of
all data used to generate the values of the data Elements used by the LCC
model and how they are compiled. The Numbers, names, descriptions, FY2005
values, units of measure, and sources of the 101 data Elements used by the
LCC model are detailed in the "Data Dictionary" table, which is shown first.
Below are summarized noteworthy points regarding the data tables and data
Elements.

Data Dictionary List

Source data for the 101 Elements are
not actually input directly into this table, but are brought in by formulas.
The only data input directly by a user is the fiscal year (as FYyyyy and
yyyy, where yyyy is the fiscal year number). So the table effectively serves
as the compilation of the source data Elements, and becomes the input dataset
to the LCC.

Therefore, no logic changes of any types were made. Minor corrections
to definitions were made, e.g., the source shown for Element 77, Labor
Inflation Rate, was Annual Library Resources Directory, but actually is the
Employment Cost Index (ECI). LCC development work by Northrup was first reviewed
before making such changes.

Inflation Rate

Source data backup was lacking for this
table (which was later found misfiled in the notebook provided), so the BLS
website was accessed and data were obtained for both the Consumer Price Index
(CPI) and ECI for FY2005. The misfiled backup was filed in the notebook for
the correct table.

The footnote for the CPI was modified to cite the specific
CPI data needed (All Urban Consumers (CPI-U)) for the update among several
types of CPI data that are available from BLS.

The footnote for the ECI
was modified to inform the user that the base year for the index has recently
changed from June, 1989 to December, 2005. Backup data for the 2005 ECI
for both bases is included in the notebook.

In future years, the ECI must
either be converted by the user from the December, 2005 base to the June,
1989 base (which are the values used in the model), or the values for prior
years in the model must be converted to values using the December, 2005
base.

Errors were found in the formulas calculating the "Constant Factor"
variable (in the CPI part of the table) for the years 2001–2005,
which were corrected. Errors in these cells would have caused errors in
the values for this variable for all years (since the value for year "t"
relies on the value for year "t+1") in any prior calculations. Correction
of these formulas fixed the current calculations for a FY2005 base year.

Readership
and Circulation

There were no noteworthy points regarding the
update of this table, which includes recorded readership and circulation
source data, from which growth rates are calculated for each.

Machines,
General

The formulas in Cells C40 and G10 were corrected to
reference activity for the correct years.

It was noted that the Machine
Cost Inflation formula in the table used a 1-year average to determine
the rate of change, which is different from almost all other rate-of-change
variables calculated in the various worksheets in the LCC model which typically
use multiple years to determine the rate. The value for this data element
for FY2005 now uses a 3-year rather than 1-year average.

Machines,
Assigned

All inputs from the FY2005 MMRs were verified, and the
formula in Cell D147 was corrected.

The LSU and DBR rates were changed
to 3-year from 5-year averages. This was done to remove the anomalous behaviour
of FY2001 and FY2002 when C1’s were both written-off and disposed in an
atypical fashion.

In the smaller table in the bottom of the Machines Assigned
worksheet (which calculates values that are apparently not used in subsequent
calculations), the formulas were changed from 7-year to 5-year averages.

Machine
Repairs

Additional information was requested from NLS, misfiled
invoices were consolidated with others already in the notebook, and reported
totals and invoice totals were compared and reconciled wherever possible.
It is noted that the calculation of the rate of change for "Non-Contract
Repair Attrition Rate" has used in the past and still uses data which
include contract repairs, i.e., total repairs by all repairers.

Machine
Disposals

No backup documentation was provided in the notebook,
but quantities (different from those of FY2004) and unit cost (the
same as for FY2004, i.e., $2 each) were already entered in the file
in this table. The unit price is all that is actually required by the
model.

Machine Usage, MTBF

This factor of 248.1 machine hours
per assigned machine was determined by Northrup and later investigated and
verified by NLS. It is dependent upon the use of a value of 1,000 hours for
the MTBF of the CBM, based upon a review of LCC model documentation. The
value was left unchanged.

Machine Batteries, Spare Parts

Total expenses for both
CBM spare parts and batteries were lacking and therefore requested from NLS,
obtained, and input into the table. A unit cost of $6.47 was assumed.

An
error in Cell C79 was corrected (activity in FY2002 rather than in FY2005
was referenced).

The error previously noted in the "Constant Factor" for
the CPI would have impacted previous calculations for batteries and spare
parts expenses by not correctly inflating historical dollars to current
dollars used to calculate multiyear averages.

Book Production

The table was using data for book production
that was not the most current. The most current data were obtained from the
NLS Production Control Department and used, including both FY2005 and multiyear
histories from PICS.

Logic for container reconditioning activity and costs
were added to the calculations. Data for container reconditioning activity
for the past 3 years were requested from NLS, provided, compiled, and used
to calculate average annual activity and costs. A weighed-average container
unit cost is now calculated taking into account both reconditioned and
new containers.

Magazines and TBT

The existing table had many errors since
a file had been pasted-in and a hidden column was throwing-off many of the
calculations. Therefore, the source data were re-input and the calculations
were reconstructed with all hidden columns removed.

The file was also using
data for magazine production that were not the most current. The most current
were obtained from the NLS Production Control Department and used, including
both FY2005 and multiyear histories from PICS.

Several formulas were changed
for which the LCC documentation called for weighted rather than simple
averages, e.g., Magazine Frequency, Magazine Media Units, Magazine Length,
Magazine Copies, Magazine Master Cost and Magazine Media Unit Cost. These
changes typically resulted in small differences, but were nevertheless changed
in order to conform with the model’s documentation.

Production Inflation
Rates

No backup or calculations had been performed for this data
Element. Source data were obtained from NLS, added to the table, and used
to generate Element values. The backup was then added to the notebook.

The formulas for both narration and duplication costs were corrected (the
range of years used to calculate the averages were incorrect).

Network & MSC
Figures

Errors were determined in the formulas in Column K after
a review of LCC documentation. Correct inflation indexes (3 are used
to inflate different cost components from 1989 values) were used, but
a factor of 1.01 raised to the 15 power was found in all of the cells.
Upon review of the LCC model documentation, these Elements are supposed
to be adjusted by the appropriate inflator and the Average Readership
Growth Rate (Element 3). The (10-year) Average Readership Growth Rate,
which changes year-to-year, should be raised to the power of the number
of years between 1989 and the current year, not a fixed factor of 1.01
raised to the same power. This mistake was causing the Element estimates
to be inflated by approximately 16% above the correct values (the Average
Readership Growth Rate is very close to zero), and likely caused high
estimates in earlier years.

This table also contains a calculation for
the Operations Inflation Rate. No update had been made for FY2005. Therefore,
the required data (CPI - Other Goods and Services dataset) were obtained
from the BLS website, printed, added to the notebook, and entered in the
table.

Facilities Inflation Rates

No backup for source data was
in the notebook, but an Adobe Acrobat version of the CoStar report with 2005
data was provided by NLS and used for the update; FY2004 data were in the
table as obtained. The CoStar report was printed and added to the notebook
and the data were added to the file.

There is a flaw in the manner in which
the Facilities Inflation Rate is calculated which significantly understates
facility space costs. The problem lies not in the inherent logic of calculating
a multiyear inflator factor for multiple geographic areas, determining
an average national inflation factor, and then calculating an annual average
rate of change. The problem is that the CoStar current rate is used in
conjunction with a 1989 GSA rate, each ostensibly representing 75% of "office
space" costs (as a proxy for library space), but the estimates are apparently
incompatible for many areas. This calculation methodology results in some
locations, like Boston, MA, showing a decline in price of 20% over the 16-year
period from 1989 to 2005, which is clearly incorrect. The logic was therefore
changed so that the inflator factor for any geographic location is equal
to the greater of the calculated value or 1.0.

Data for Jacksonville and
Miami-Dade were added to the calculations, since 1989 data and current
data exist for both.

USPS

Backup for source data as hardcopy was available in
the notebook, and was input to the table.

A correction to the formula which
calculates a multiyear average total cost was corrected (it included 1998–2003
activity rather than activity through 2005).

Some costs incurred by the USPS for which it is reimbursed by Congress
are actually attributable to the delivery of mail to and from overseas voters
and not for Free Matter. Therefore, USPS costs for the free national library
program are overstated to some extent, but by how much is uncertain. It may
be impossible to separate the costs for these two uses, but it may also be
worth asking the USPS if they have any estimates for the same (based upon
sampling and/or audits).

Compare 2005 to Previous

This table simply takes the final
Element values from the Data Dictionary table and compares them to Element
values calculated for prior years. No data inputs are actually made directly
to this table.